Keppel Reit's Q3 gains dip on Sydney property sale

Higher income from Ocean Financial Centre (left, with green wall facade) and better results from its associates helped cushion the blow in the third quarter for Keppel Reit.
Higher income from Ocean Financial Centre (left, with green wall facade) and better results from its associates helped cushion the blow in the third quarter for Keppel Reit.ST PHOTO: LIM YAOHUI

Net property income down due to absence of contributions from King St property

Keppel Reit's income took a dip in the third quarter because of its recent sale of a Sydney property.

Net property income slid 5.4 per cent year on year to $31.6 million for the three months to Sept 30, which the real estate investment trust (Reit) attributed to the absence of contributions from 77, King Street, which it sold in late January.

But higher income from Ocean Financial Centre and better results from its associates helped cushion the blow. Associates such as Marina Bay Financial Centre contributed $24.7 million, up 33.2 per cent from a year earlier.

Income from joint ventures roughly doubled to $7.9 million, thanks to higher contributions from the David Malcolm Justice Centre in Perth.

Income available for distribution fell 3.6 per cent to $52.5 million, while distribution per unit (DPU) fell 5.9 per cent to 1.6 cents from 1.7 cents previously. Based on a DPU of 1.6 cents, the annualised yield for the year to date was 5.8 per cent.That compares with a yield of 7.3 per cent for the same period a year earlier.

The Reit manager said in a presentation to unit holders that the yield compared favourably to other Reits. The FTSE Straits Times Reit Index had a dividend yield of 5.6 per cent while the FTSE Straits Times Real Estate Index had a 4.3 per cent yield.

  • AT A GLANCE

  • NET PROPERTY INCOME: $31.6 million (-5.4%)

    INCOME AVAILABLE FOR DISTRIBUTION: $52.5 million (-3.6%)

    DISTRIBUTION PER UNIT: 1.6 cents (-5.9%)

The Reit manager said that all its properties in the Raffles Place and Marina Bay precincts are completely leased, and that its overall occupancy was maintained at 99.5 per cent as at Sept 30. It said that it achieved higher rents for its Singapore office leases at $9.85 per sq ft (psf), which was higher than property consultancy CBRE's data which put average Grade A office rent at $9.30 psf for the quarter.

The Reit manager said that new office supply for the next one to two years and slower economic growth will pose challenges for the Singapore office market. It cited CBRE data, which said that a market recovery could start by early 2018.

Net asset value per unit fell from $1.44 as at Dec 31 last year to $1.42 as at Sept 30. The Reit's units closed flat at $1.115 yesterday. It posted the results after the market closed.

A version of this article appeared in the print edition of The Straits Times on October 19, 2016, with the headline 'Keppel Reit's Q3 gains dip on Sydney property sale'. Print Edition | Subscribe